Each morning, Bill Scher and Terrance Heath serve up what progressives need to affect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
Boehner Backs Bush Tax Cuts In Quest For Speaker
BREAKING THIS AM House Minority Leader John Boehner announces economic plan: more tax cuts for multi-millionaires, fire Obama's top economic aides. NYT: "In addition to encouraging Mr. Obama to extend the Bush tax cuts that are set to expire, Mr. Boehner [said] the president should seek and accept the resignations of Treasury Secretary Timothy Geithner and Larry Summers, the head of the National Economic Council. 'We have tried 19 months as government as community organizer,'..."
House Minority Whip Eric Cantor suggests more earmarks, no health care funds, if GOP claims House. Politico: "Cantor said it’s unlikely that health care overhaul legislation will be repealed with Obama in the White House. But it’s more realistic to simply refuse to appropriate money to fund health care reform ... Cantor also signaled that earmarks may come back, after a one-year hiatus in which House Republicans set a moratorium on all earmark requests."
Fed AWOL On Jobs
"Fed to Unemployed: Drop Dead" says Mother Jones' Kevin Drum: "Jon Hilsenrath of the Wall Street Journal ... reports that there was a considerable amount of dissension about even the puny action [the Fed] ended up taking ... there are no more than two or three Fed governors who are currently in favor of more aggressive action as long as the economy doesn't go completely off the cliff."
Fed lacks urgency on employment, says Economist's View's Mark Thoma: "One of the lessons the Fed thinks it learned about inflation is that when you see it, you need to move aggressively ... when it comes to the other half of the Fed's mandate, unemployment, there is no sense of urgency, gradualism is fine. But just like inflation, a strategy of delaying and only gradually responding to signals that a problem exists is asking for trouble. "
WH econ aide Jared Bernstein touts auto industry restructuring: "even while some in government and from the pundit class urged the President and Vice President walk away from this industry, they wouldn't turn their backs. Instead, they bet on the American worker ... And that bet is paying off. In the year before we took office, the auto industry shed 431,300 jobs. But in the 13 months since GM and Chrysler emerged from bankruptcy, auto industry employment has increased by 76,300 ... close to 40,000 come from the suppliers. That's the fastest year over year growth that they've seen in a decade."
Corporations are using their extra cash to acquire other corporations, instead of hiring more workers reports The Atlantic's Daniel Indiviglio.
NYT edit board puts jobs over tax cuts for multi-millionaires: "Tax cuts for the rich can safely be allowed to expire because wealthy taxpayers tend to save rather than spend their tax savings. The revenue from letting these expire — nearly $40 billion next year — would be better spent on job-creating measures."
Dean Baker rips NYT oped for dismissing China currency issue: "...an an oped from Joseph Massey and Less Sands that claims that imports from China, and apparently also imports from Japan, do not depend on their price. That's right -- all of you people who wasted time in economics classes where we taught that higher prices meant less demand, you can just forget everything you learned."
States still in budget squeeze. Bloomberg: "U.S. states will confront budget deficits through next year even as tax revenue rebounds after a slide of 15 months, triggered by the longest recession in seven decades, according to treasurers from around the country. Tax collections are showing signs of improving, though not by enough to prevent the need for further cuts in state spending ... "
Do small businesses create more jobs than big businesses? No, but new businesses do. Economist's View's Mark Thoma: "[A new paper] finds that 'once we add controls for firm age, we find no systematic relationship between net growth rates and firm size.' The paper does find, however, that conditional on survival, young firms (who tend to be small) grow faster than older firms. ... This is one reason why the relationship between social insurance and job growth may not be negative as many on the right would have you believe. Would you be more likely to start a new business if you were sure that, if the business failed despite your best efforts, you would still have health insurance, still be able to feed your family, still be able to send your kids to college, etc. etc."
Joseph Stiglitz worries about European austerity. Bloomberg quotes: "Because so many in Europe are focusing on the 3 percent artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip."
Extend-And-Pretend Foreclosure Policy?
Interfluidity slightly more charitable: "Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of 'extend and pretend', but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend ... Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns ..."
Rortybomb rips Treasury for defense of ant-foreclosure program: "They are sticking by HAMP. The narrative seemed to change from helping homeowners to spacing out the foreclosures ... it’s explicitly extend-and-pretend, and also fairly cynical."
Reuters' Felix Salmon: "HAMP might well have been a success in the ways that Treasury enumerates — helping out banks on the solvency front, reducing the rate of foreclosures ... it’s still a tragedy that hundreds of thousands of people who signed up for loan modifications — and who made all of their modified loan payments in full and on time — have had their modifications cancelled."
New Credit Card Rules In Effect
President hails implementation of new credit card rules. Politico quotes: "As of today, consumers will be protected against unreasonable fees and penalties for late payments, as well as unfair practices involving gift cards ... This law will also make the terms of credit cards more understandable and puts a stop to hidden over-the-limit fees and other practices designed to trap consumers. It restricts rate increases that apply retroactively to old balances. And the CARD Act prevents companies from increasing rates within the first year an account is opened.”
HuffPost profiles Judge Jed Rakoff for rejecting weak government settlements with big banks: "Rakoff has garnered public attention in the past year for taking a stand against insufficient settlements between government prosecutors and Wall Street. ... Now, two more judges have started to call out bank settlements that don't appear to serve the public interest."
FDIC's Sheila Bair backs Basel international capital requirements, but warns against effort to weaken them in FT oped: "Crucially, the reforms include an international leverage ratio. This would place a ceiling on overall leverage in good times and bad, while serving as a hard and fast reality check against too-thin capital cushions when models underestimate the risks ... even as the Basel reforms move toward ratification by leaders of the Group of 20 major economies this autumn, there are the inevitable calls to water them down. A number of industry representatives are claiming that stronger capital requirements will stifle lending ... if financial reform is about anything, it is about better aligning incentives and internalising the costs of leverage and risk-taking."
Inflation hawk Fed dissenter downplays effect of Wall St. reform. Reuters: "Thomas M. Hoenig, president of the Federal Reserve Bank of Kansas City, warned on Monday that landmark financial reforms may not end market perceptions that taxpayers will rescue the largest banks..."
Offshore drilling moratorium stays in place for now. AP: "The nation's top drilling regulator, Michael Bromwich, says he will propose a replacement for the moratorium by Halloween and leans against exceptions."
UAW joins union-enviro BlueGreen Alliance reports The Hill: "The BlueGreen Alliance is in the midst of a cross-country bus tour aimed at reviving a broad Senate energy and climate-change bill..."
"Insurers Begin Blaming Health Law For Premiums Increases" finds Wonk Room's Igor Volsky: "...Blue Cross Blue Shield of North Carolina [said it] would be increasing premiums to keep up with medical inflation and the requirements of the new health care law ... Adam Linker, a policy analyst with the N.C. Justice Center’s Health Access Coalition, doesn’t think that policy holders should have to bear the brunt of the issuer’s decision to adopt early changes, particularly since they’ll have to pay higher premiums without the added benefit of the law’s subsidies or Medicaid expansion (both of which don’t begin before 2014)."
"Small Nebraska Town May Raise Taxes To Defend Immigration Law" reports Wonk Room's Andrea Nill.
Obama administration rooting out wasteful contracts. Bloomberg: "...it plans to review 26 government information-technology projects worth a total of $30 billion as part of an effort to trim back or cancel contracts that aren't meeting goals."
Conservative think tank purge? Washington Monthly's Steven Benen: "...Cato was home to two widely-read, well-respected 'liberaltarians,' and both are out, just as the think tank becomes even more conservative? ... [Earlier] David Frum was forced out at the American Enterprise Institute after failing to toe the Republican Party line. Bruce Bartlett was shown the door at the National Center for Policy Analysis for having the audacity to criticize George W. Bush's incoherent economic policies."